Getting to a more digital or fully digital supply chain is becoming more and more of a requirement (rather than an aspiration) for the majority of businesses today. Why? Simply because in an increasingly connected world (supplier relationship management systems talking to contract management systems and eSourcing systems talking to eInvoicing systems, and logistics talking to fleet talking to the driver, all talking to the ERP system – and around it goes) the trustworthy functioning and visibility of the supply chain, how it delivers and how it communicates, is becoming ever more important to a firm’s ability to perform, deliver on-time and stay competitive.

It all sounds a bit jargony, but in truth, if you can’t deliver on time, whether owing to unmanaged risk in the supply chain (read our short series here on what these risks might be) or mis-communications/malpractice, you can’t stay competitive. Paper-based activities, phone calls and some IT-enabled practices still make up the majority components of many a supply chain. But a digital supply chain, web-enabled, that is connected at all points by smart components, puts a firm in the enviable position of being able to move resources and inventory to where they need to be, quickly or in advance of disruption, be that from transportation or origin supply.

“Most enterprise processes must become more digitized” – says digital supply chain specialists, PointSource. Their recent report, looking at the status of the digitised supply chain across all industries, concludes that “The supply chain today is a series of largely discrete, siloed steps taken through marketing, product development, manufacturing, and distribution, and finally into the hands of the customer. Digitization brings down those walls, and the chain becomes a completely integrated ecosystem that is fully transparent to all the players involved.”

“The ability to thrive in spite of complexity is critical for the supply chain industry, where every interaction depends on clearly managed and defined technical interactions. Even the smallest hiccup with supply chain data can result in millions of dollars lost due to errors in production, downtime or other operational mishaps. As complexity increases, it will become even tougher for stakeholders to diagnose, understand and solve these problems.”

Managing complexity in the supply chain is reliant more and more upon digital interactions, processes, and collaboration, to speed up the supply chain process and mitigate risk. And this is growing in importance as the market expands - a recent Gartner study found that the supply chain management market will grow to over $13 billion this year, the report says. But it also warns that steps to modernise the supply chain require more than just financial backing.

Digital-ready solutions do exist, but there are three less tangible considerations that must also take centre stage; the report defines these as: culture, communication, and data management.

Culture

This is about industries and marketplaces where repetition breeds complacency; it can be difficult for supply chain stakeholders to encourage change from within. 94% of supply chain respondents (we do not have the sample number) say their leadership “understands how digital can create efficiencies in daily operations. However, despite a growing interest in digital solutions and the availability of resources to see these investments through, 89% still rely on disparate legacy systems that impact the speed of development … and 40% of manufacturers still manage their assets and facilities manually or via homegrown systems.”

There is also the issue of ageing skilled labourers – those who have hands-on warehouse experience and an inside understanding of the supply chain. Their roles can be critical, and without them, serious downtime might be the result. As they become replaced by a young workforce, with “vastly different levels of digital fluency, workstyles and communication preferences,” firms must recognise the new needs of their whole supply eco-system.

Communication

Recording and exchanging information about moving products and their accompanying data from one stakeholder to another, is still carried out in a lot of instances by hand. Often then transferred to an online system. Human error, therefore, is still very apparent and one event can have a dramatic domino effect on the whole supply chain.

And different audiences have different needs for the way information is conveyed to them. Unfortunately “just 36% of supply chain leaders are extremely confident that their organization's audiences are accurate and well defined, with another quarter (24%) being somewhat confident.”

Data Management

A high volume of data is important to have or to harvest, but as usual, the message is that it needs to be managed well to be useful. The report runs through what the various aids are for supply chain organisations, including AI and machine learning. Partnerships are also identified as important, because supply chain organisations “cannot master every step of their network.” Yet only “33% of respondents said it's very easy for internal developers, third-party partners or service providers to integrate with their organization’s existing systems.”